Crystal inc. is a multifaceted company that deals with the mining, cutting, and selling of
diamonds. It gives distributors and suppliers access to its database to place orders or
restock inventories electronically and automatically. Which of the following is the
network implemented in the company?
A) intranet
B) chaosnet
C) extranet
D) ethernet
In the long run, what happens to the demand curve facing a monopolistically
competitive firm that is earning short-run profits?
A) The demand curve will shift to the left and became more elastic.
B) The demand curve will shift to the left and became less elastic.
C) The demand curve will shift to the right and became more elastic.
D) The demand curve will shift to the right and became less elastic.
Oligopoly differs from perfect competition and monopolistic competition in that
A) barriers to entry are lower in oligopoly industries than they are in perfectly
competitive and monopolistically competitive industries.
B) demand and marginal revenue curves are more useful for analyzing oligopoly than
they are for analyzing perfect competition and monopolistic competition.
C) because oligopoly firms often react when other firms in their industry change their
prices, it is difficult to know what the oligopolist’s demand curve looks like.
D) the concentration ratios of oligopoly industries are lower than they are for perfectly
competitive and monopolistically competitive firms.
The price of a financial asset should be equal to
A) the face value of the asset.
B) the present value of the sum of the coupon payments and the interest rate.
C) the face value of the asset divided by the interest rate.
D) the present value of payments to be received from owning that asset.
If the price of grapefruit rises, the substitution effect due to the price change will cause
A) a decrease in the demand for grapefruit.
B) a decrease in the demand for oranges, a substitute for grapefruit.
C) a decrease in the quantity demanded of grapefruit.
D) a decrease in the quantity supplied of grapefruit.
Table 2-8
Table 2-8 shows the number of labor hours required to produce a digital camera and a
pound of wheat in China and South Korea.
Refer to Table 2-8. What is South Korea’s opportunity cost of producing one pound of
wheat?
A) 60 digital cameras
B) 20 digital cameras
C) 5 digital cameras
D) 0.05 units of a digital camera
In each of the following situations, list what will happen to the equilibrium price and
the equilibrium quantity for a particular product, which is a normal good.
a. The population increases and the price of inputs increase.
b. The price of a complement increases and technology advances.
c. The number of firms in the market increases and income increases.
d. Price is expected to increase in the future.
e. Consumer preference increases and the price of a substitute in production decreases.
eBay is an online auction site where more than 200 million items are auctioned
annually. What type of auctions are run on eBay?
A) noncooperative auctions
B) second-price auctions
C) cooperative auctions
D) double-blind auctions
Suppose Argyle Sachs has to choose between building a smaller sweater factory and a
larger sweater factory. In the following graph, the relationship between costs and output
for the smaller factory is represented by the curve ATC1, and the relationship between
costs and output for the larger factory is represented by the curve ATC2.
a. If Argyle expects to produce 3,600 sweaters per month, should he build a smaller
factory or a larger factory? Briefly explain?
b. If Argyle expects to produce 5,000 sweaters per month, should he build a smaller
factory or a larger factory? Briefly explain.
c. If the average cost of producing sweaters is lower in the larger factory when Argyle
produces 6,500 sweaters per week, why isn’t it also lower when Argyle produces 4,000
sweaters per week?
All else equal, if the supply of veterinarians continues to increase while the population
of dogs and cats continues to decline, the incomes of veterinarians will
A) increase.
B) decline.
C) remain unchanged.
D) be indeterminate.
Many economists are critical of proposals to pass comparable worth legislation. Which
of the following is the best explanation for this criticism?
A) Comparable worth legislation will only lead to efficient market outcomes if women
in low-paying jobs suffer from cognitive dissonance.
B) Proposals for comparable worth legislation assume that wages for low-paying
women’s jobs should include compensating differentials. Economists believe that
compensating differentials should be part of the wages for all jobs held by women.
C) Proposals for comparable worth legislation call for increases in the wages of jobs
held predominantly by women. Economists believe that this legislation should be used
to increase the wages of all workers.
D) Many economists believe that allowing markets to determine wages, rather than the
rules required by comparable worth legislation, results in more efficient outcomes.
One reason why the coffeehouse market is competitive is that
A) demand for specialty coffee is very high.
B) it is trendy and therefore is likely to have a customer following.
C) barriers to entry are low.
D) consumption takes place in public.
DeShawn’s Detailing is a service that details cars at the customers’ homes or places of
work. DeShawn’s cost for a basic detailing package is $40, and he charges $75 for this
service. For a total price of $90, DeShawn will also detail the car’s engine, a service that
adds an additional $20 to the total cost of the package. What is the marginal cost of
adding the engine detailing to the basic detailing package?
A) $20
B) $30
C) $60
D) $60 plus the value of his time
A profit maximizing monopoly’s price is
A) the same as the price that would prevail if the industry was perfectly competitive.
B) less than the price that would prevail if the industry was perfectly competitive.
C) greater than the price that would prevail if the industry was perfectly competitive.
D) not consistently related to price that would prevail if the market was perfectly
competitive.
The income effect of a wage increase will cause a worker to devote
A) more time to labor and more time to leisure.
B) more time to labor and less time to leisure.
C) less time to labor and more time to leisure.
D) less time to labor and less time to leisure.
Unlike firms that sell stock in financial markets, which are known as ________ firms,
companies which do not sell stock in financial markets are known as ________ firms.
A) public; private
B) open; closed
C) corporate; proprietary
D) stock market; bond market
Figure 15-12
Figure 15-12 shows the cost and demand curves for a monopolist.
Refer to Figure 15-12. If this industry was organized as a perfectly competitive
industry, the market output and market price would be
A) output = 62; price = $24.
B) output = 83; price = $22.
C) output = 62; price = $18.
D) output = 104; price = $20.80.
If the marginal utility Ida Mae receives from eating chicken wings is negative then
A) her total utility from eating chicken wings has fallen.
B) her total utility from eating chicken wings is negative as well.
C) Ida Mae definitely does not like chicken wings.
D) her total utility has risen, but by less from the last chicken wing than from the next
to last chicken wing.
Collusion between two firms occurs when
A) the firms independently pursue strategies that could hurt each other.
B) firms explicitly or implicitly agree to adopt a uniform business strategy.
C) announce that each will match its rival’s market price.
D) firms act altruistically to bring about the economically efficient outcome.
Table 16-3
Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the
demand for this service. Assume that each person surveyed demands only one hour of
pet sitting services per period. Table 16-3 above shows a portion of her survey results.
Refer to Table 16-3. Suppose Julie’s marginal cost of providing this service is constant
at $7 and she charges $7. How many hours will be purchased and what is her total
revenue?
A) 5 hours; total revenue = $35
B) 4 hours; total revenue = $28
C) 3 hours; total revenue = $21
D) 2 hours; total revenue = $14
Figure 17-3
Refer to Figure 17-3. Which of the panels in the diagram best represents an individual’s
labor supply curve?
A) Panel A
B) Panel B
C) Panel C
D) Panel D
A corporation is the type of business has ________ government rules and regulations
affecting it.
A) no
B) the fewest
C) the most
D) only federal
Which of the following is a problem inherent in centrally planned economies?
A) Households and firms make poor decisions in choosing how resources are allocated.
B) There is too little production of low-cost, high-quality goods and services.
C) Production managers are more concerned with satisfying consumer wants than with
satisfying government’s orders.
D) Exports tend to exceed imports.
Which of the following is not an advantage of cost-plus pricing?
A) It is easy to calculate.
B) It requires little information.
C) If a firm is selling multiple products, it ensures that the firm’s prices will cover costs
that are difficult to assign to one product.
D) It ensures that the firm will maximize its profits.
Suppose your expenses for this term are as follows: tuition: $12,000, room and board:
$6,500, books and other educational supplies: $1,500. Further, during the term, you can
only work part-time and earn $3,500 instead of your full-time salary of $14,000. What
is the opportunity cost of going to college this term, assuming that your room and board
expenses would be the same even if you did not go to college?
A) $13,500
B) $20,000
C) $24,000
D) $30,500
In a perfectly competitive market the term “price taker” applies to
A) sellers and buyers.
B) firms but not buyers.
C) buyers but not sellers.
D) only the smallest sellers and buyers.
Which of the following statements is generally true?
A) Rivalry is less the larger the number of firms in an industry.
B) The smaller the number of firms in an industry, the greater the rivalry.
C) The larger the number of firms in an industry, the greater the rivalry.
D) The degree of rivalry in an industry is largely independent of the number of firms.
Which of the following statements about the prisoner’s dilemma is false?
A) The prisoner’s dilemma in a one-shot game leads to a noncooperative, equilibrium
outcome.
B) The prisoner’s dilemma in repeated games could lead to cooperation especially if
there is some enforcement mechanism that punishes a player who does not cooperate.
C) Players caught in a prisoner’s dilemma act in selfish ways that lead to an equilibrium
that is sub-optimal.
D) The prisoner’s dilemma game can never reach a Nash equilibrium as long as players
do not cooperate.
Between 1950 and 2013 the productivity of wheat farmers in the United States more
than doubled. This means that
A) the amount of land and other resources devoted to wheat production more than
doubled.
B) the incomes of wheat farmers more than doubled.
C) the total amount of wheat produced more than doubled.
D) the amount of wheat produced by the average farmer more than doubled.
Table 14-8
Two rival oligopolists in the athletic supplements industry, the Power Fuel Company
and the Brawny Juice Company, have to decide on their pricing strategy. Each can
choose either a high price or a low price. Table 14-8 shows the payoff matrix with the
profits that each firm can expect to earn depending on the pricing strategy it adopts.
Refer to Table 14-8. If the firms cooperate, what prices will they select?
A) Both firms will select a low price.
B) Brawny Juice will select a high price, Power Fuel a low price.
C) Both firms will select a high price.
D) Brawny Juice will select a low price, Power Fuel a high price.
The marginal revenue product of labor is defined as
A) the change in the firm’s revenue as a result of selling one more unit of output.
B) the change in the firm’s output as a result of hiring one more worker.
C) the change in the firm’s profit as a result of hiring one more worker.
D) the change in the firm’s revenue as a result of hiring one more worker.
For-profit producers will produce only private goods because
A) markets exist for private goods but not for public goods.
B) the cost of production can be easily determined.
C) buyers will be willing to pay for the goods since the benefits are excludable.
D) all external benefits can be internalized using market prices.
Stockholders
A) select the board of directors of a corporation.
B) select the employees of a corporation.
C) select the managers of a corporation.
D) all of the above.